Governor Tom Corbett signed legislation Wednesday to end so-called "triple dipping" by retired state workers.
The new law prevents state retirees from receiving unemployment compensation for leaving a temporary job in order to remain eligible for pension, retirement or annuity benefits.
Retired state employees who are hired back as annuitants can work a maximum of 95 days for the state each year.
Before the law, they were permitted to collect unemployment benefits after leaving the temporary job - on top of their retirement and the pay they received for the temporary work.
Supporters of the legislation said during the last three years, more than 600 state retirees collected a total of $2 million in jobless benefits while receiving a state pension.